Washington — The Trump administration's proposed 2020 biofuel mandate -- for refiners to blend 20.04 billion gallons, up less than 1% from this year -- could lead to flat or slightly lower US ethanol demand after factoring in small refinery waivers expected to be granted next year, Renewable Fuels Association President Geoff Cooper said Monday in an interview.
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Cooper said the implied conventional ethanol mandate of 15 billion gallons has created closer to 13.5 billion-14 billion gallons of ethanol demand because of widespread refinery exemptions the Environmental Protection Agency granted.
"Those volumes are below the E10 blendwall," Cooper said. "The [Renewable Fuel Standard] is not functioning to really drive growth in E15 and E85, and RIN prices are remaining low and not doing their job to push those higher blends into the market."
S&P Global Platts assessed D6 ethanol RINs for 2019 compliance at 21 cents/RIN and 2018 credits at 16.75 cents/RIN, both down 2.75 cents/RIN from the last assessment July 3.
RINs are tradable credits EPA issues to track production and use of alternative transportation fuels. For corn-based ethanol, one gallon of ethanol yields one RIN.
Refinery trade groups maintain that the small refinery waivers have not hurt ethanol production, sales, or demand.
Ethanol made up 10.1% of US gasoline supply in the week that ended June 28, up from a four-week average of 9.78%, according to S&P Global Platts Analytics. It sees ethanol remaining above 10% in upcoming weeks.
Platts Analytics expects a slight increase in E15 consumption in June, July and August, after EPA's recent approval of year-round sales of gasoline blended with 15% ethanol.
FLAT BIODIESEL MANDATE
EPA on Friday proposed volumes for its 2020-21 biofuel mandate, including 5.04 billion gallons of advanced biofuel, up from 4.92 billion gallons this year. That means the implied requirement for blending conventional ethanol remains at 15 billion gallons.
The mandate for blending cellulosic biofuel would rise to 540 million gallons in 2020 from 420 million gallons this year.
EPA wants to keep the 2021 biodiesel mandate at 2.43 billion gallons, prompting immediate criticism from biodiesel producers. The biodiesel requirement gets set an year ahead of the other categories.
Renewable fuel would make up 10.92% of US transportation fuel supply next year before any refinery waivers, if volumes are approved as proposed.
"The proposed mandates are in line with what we expected," said Corey Lavinsky, Platts Analytics director of global biofuels analytics.
The biofuel industry had hoped for a 2020 conventional ethanol mandate of 15.5 billion gallons, after an appeals court ruled in 2017 that EPA had improperly waived 500 million gallons in the 2016 mandate.
But EPA said in the proposal that adding the gallons retroactively "would be unduly burdensome and inappropriate."
"We are proposing to find that the applicable 2016 volume requirement for total renewable fuel and the associated percentage standard should not be changed," EPA said.
The Fueling American Jobs Coalition and American Fuel & Petrochemical Manufacturers both used the occasion of the RFS proposal to launch television ads calling on the Trump administration and Congress to protect refining jobs from the biofuel mandate.
EPA will accept comments on the proposed volumes before issuing final numbers by November 30.
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